KE Holdings Inc

Hello, ladies and gentlemen. Thank you for standing by for KE's third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. This conference call is being recorded. And I will now turn the call over to your host, Mr. Matthew Chow. I am the director of the company. Please go ahead, Matthew.

Thank you, operator. Good evening and good morning, everyone. Welcome to Kerr Holdings Inc., our biggest third quarter 2020 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website, www.investors.ke.com. On today's call, we have Mr. Stanley Yongdong Peng, our co-founder and chief executive officer, and Mr. Cao Xu, our chief financial officer. Mr. Peng will provide an overview of our strategy and business development, and Mr. Xu will provide additional details on the company's financial results and discuss financial outlook. Before we continue, I refer you to our state property statement in our earnings past release, which applies to this call, as we will make forward looking statements. Please also note that Baker's earnings press release and this conference call include discussions of an audit gap financial information, as well as an audit non-gap financial measures. Please refer to Baker's press release, which contains a reconciliation of the audit non-gap measures to comparable gap measures. Lastly, unlike otherwise stated, all figures mentioned during this conference call are in your name. With that, I will now send the call over to our CEO, Mr. Stanley Peng. Please go ahead, sir.

Thanks, Matthew. Hello, everyone, and thank you for joining us today, our first earning course as a public company. We appreciate having the opportunity to be directly with all of you and to share our perspective on how we are doing in continuously fulfilling our mission of transforming housing transactions and services industry in China. We always uphold the strong conviction of doing the right thing, even if it's difficult, so that we can achieve long-term success. We are committed to reinventing the industry and strive to take good care of housing customers and service providers, as well as other platform participants in all aspects. While we believe technology and our value proposition are the two pillars underlying our advancement in fulfilling our mission, Through continuous development of our infrastructure, including our operating system, the agent-cooperating network, or ACN, as well as the intensive community-centric touchpoints and data-driven products and solutions, we further promote standardization and digitalization across data transaction process and service quality in our industry. As a result, we deliver a robust performance both operationally and financially in the third quarter. We achieved total revenue of RMB20.5 billion. This represents the increase of 17.9% year-over-year, driven by solid growth transaction volume of GTV growth of 87.2% to RMB1.05 trillion. along with healthy tech rates on our platform. Meanwhile, in the third quarter, our adjusted net income reached 1,858 million RMB, an increase of 210.6% year-over-year. Next, let me give you more color in terms of our recent business updates. Firstly, in the third quarter, we continue to enhance the infrastructure on our platform For ACN, through rules and protocols, clearly defined rules and a commission allocation mechanism, social trust built upon big score. ACN enables information and resource sharing, promotes trust between participants, fosters cross-brand and cross-store collaborations, and created a professional network for service providers to get connected and engage on the platform. At the end of the third quarter, more than 44,800 stores were connected on the BigQuery platform with 477,000 agents. Our expansion scale also comes with enhanced quality. Over 70% of total existing home transactions were completed through cross-store collaborations. while Canadian stores contributed nearly 80% of the existing home listings as of September 13th. We vigorously promoted store scoring system on the platform, which helps build up trust between stores and agents, improve the operational efficiency and healthiness of our ACN. By the end of the third quarter, 25.7% of stores on our platform achieved a higher a highest A rating. We are also pleased to have more agents with higher education backgrounds joining the platform. While we expanded our community-centric network, we also continue to increase our online presence through both organic growth and marketing activities. Our average monthly active users of apps and WeChat mini program increased by 82.1% year-over-year to $47.9 million in the third quarter, leading to more transactions generated from online leads. Our housing dictionary covered 233 million homes, which is over 60% of all the housing stock in China. By the end of the third quarter, our VR database accumulated 3D data on 7 million homes, compared with 5 million by the end of the premier quarter. Our continuous digitalization of the industry and data collection is further deepening our moat. Next, moving to our existing home transaction service business. According to Baker Research Institute, China's overall existing home transaction market grew by 22.6% year-over-year. Much of this growth was actually attributable to the release of pent-up demand, as well as low base in the second half of 2019. On our platform, the total GTV of existing home transactions reached $517.6 billion, RMB for the third quarter, representing an increase of 71.8% year-over-year. In the third quarter, we launched several initiatives to optimize customer experience and enhance transaction efficiency. For example, we scaled up our online mortgage processing services, which makes the post-sales contract transaction process more intuitive and efficient. Through our collaboration with leading commercial banks and our online mortgage service applications, we moved the entire mortgage process online. We helped customers reduce the time between signing of sales contracts and mortgage interviews by 19%. We note that the COVID-19 pandemic substantially accelerated the adoption of such services since people tried to minimize face-to-face interaction. In the third quarter, almost 30% of commercial mortgage loans facilitated by us were processed through our online mortgage processing services. By the end of September, the online mortgage processing service on Baker's platform covered 45 cities and more than 1,000 bank branches from 66 collaborating banks nationwide. Another example was the premium package for home sellers. As the supply and demand in the housing market becomes more balanced, to meet the rising demand for quality services and urgent home sales, as well as attract more quality home listings and facilitate more efficient matching. In the third quarter, premium package for home sellers expanded on the platform. Under these services, guarantee of property sales within a certain time period, as well as medical service commitments and value-added services offer to home sellers. We believe those premium services demonstrated our ability to leverage AI and big data to drive intelligence matching and sales. By the end of the third quarter, more than 20,000 listings on the premium package for home sellers agreements were signed up in the 33 cities. Certainly, turn to our new home transaction services. In the third quarter, according to the National Bureau of Statistics, China's overall new home sales market grew by 21.4% year-over-year. On the supply side, developers enhanced their sales effort, including partnership with brokerage services in order to accelerate sales through and cash cycle. We grew our GTV of new home transaction services by 100%. and 5.7% to RMB 420.7 billion in the third quarter of 2020. Our account receivable collection period also improved in the third quarter. During the third quarter, we also adopted a series of measures to further improve customer experience and solidify our core competencies. We partnered with developers and pioneered the three-day free return policy to new home customers to ensure adequate levels of customer protection. The new home transaction services industry has lagged fine behind other consumer verticals which have widely applied three-day free return policies for long. The three-day free return policy on our platform has over 3,000 projects cumulatively by the end of September. In more than 17 cities, uh 70 cities meanwhile 42 developers out of our top 50 developers in china have partnered with us on the commitments meanwhile we have also upgraded a new home risk control mechanism supported by our database of our scientific transaction and user data we are able to implement precautions control measures to each developers each project and even to cash transactions Our customers are better prepared while we achieve improved AI turnover level and are confident to offer timeless commission advances to our agents. Firstly, as to our continuous efforts on our standardization and digitalization, I would like to give you an update on our technical innovation. During the third quarter, we further upgrade our AI assistant Xiaobei version 2 to standardized agent service process by supporting the entire workflow. The collected data through Xiaobei will feed back to agent training and product interaction Meanwhile, we have made solid progress in VR by widely adopting VR Lite, a lighter-version application with light-weighted, cost-reduced VR cameras, capitalized for the rental market in the third quarter. In the past September, our VR property showings accounted for over 40% of total online and offline agent-guided tours. In addition, we continue to attract top talent to join us. Dr. Jie Pingye, professor at the University of Michigan, a veteran and top expert in the field of machine learning and data monitoring and analysis, was recently appointed as our chief scientist and head of AI technical centers to lead our AI-related research and applications. Lastly, to summarize, as people spend more time at home this year, we are seeing people become more focused on better living conditions as well as pursuing quality services and personalized experience when they navigate and proceed housing transactions. The recent trend resonates well with our long-term dedication and our mission of an admirable service joined for living. lead to the phenomenal growth of our platform today. We believe those recent trends represent the future as we further ask you our strategic initiatives centering on our conviction of taking care of the consumer and supporting the service providers. We remain excited about our growth path and our confidence that we can create sustainable value for our housing customers service providers and our platform participants over the long run. With that, I would like to turn the call over to our CFO, Pao Xu, for a closer review of our financials. Thank you.